Car sales are up, but are there EV warning signs?
What the automakers really say about the future
Did you see the headlines of the last couple weeks about auto sales? Buyers are back and vehicles are available. General Motors won the sales crown for the second quarter with a nearly 20% jump in overall vehicle transactions.
There was big news about the sales of electric vehicles (EVs), too. Americans are thinking more and more about moving from an internal combustion engine to a battery-powered, or hybrid vehicle. Cox Automotive says its survey of 1,000 consumers showed that half of them are considering buying an EV.
EV sales numbers are up dramatically. In the second quarter 305,000 EVs were sold. That amounted to 8% of all car sales. That may sound like a small percentage of overall sales, but, that is a 56% increase from the same period last year. According to the auto industry association, there were 55 battery-powered EVs available in the second quarter. The majority, 29, were what are known as utility vehicles. Americans like their SUVs and crossovers. The graph of EV sales is headed up and supporters are applauding.
WARNING SIGNS?
However, there is another narrative that is not as optimistic on the trajectory for the EV transition and it comes from, of all sources, the auto industry itself. The Alliance for Automotive Innovation represents many of the world’s largest automakers and highlights some serious concerns about this transportation transformation.
The automakers are raising a red flag over what they see as warning signs about the adoption of EVs. One of the biggest concerns is public charging, which is directly correlated to range anxiety. The carmakers say there just aren’t enough public charging ports for the number of cars being purchased by Americans. The US government is seeding the construction of new charging ports, but the Alliance says the installation is not keeping up with EV sales. The majority of charging, about 80%, is done at home. Still, range anxiety is real for some owners. They worry about a longer trip away from home and being able to get a charge.
Citing a California Energy Commission conclusion, the Alliance says there needs to be one charging port for every seven EVs on the road. Currently, the Alliance says that rather than a ratio of 7:1, there are 25 EVs on the road for every charge port. Considering the current sales rate, the Alliance says 39 EVs are hitting the road for each port that is added to the charging infrastructure.
Automakers are reliant on the $7,500 tax write off for customers who are making the move to an EV. But the Biden Administration subsidy requires that the EV batteries have a growing amount of “Made in America” elements. The automakers warn there are not enough battery components being developed in the US.
CONSUMER HESITANCY
Some of these concerns may account for some of the other conclusions made by Cox Automotive last month. Cox says while Americans may be thinking about buying an EV, they aren’t pulling the trigger and actually buying. Cox points to supply at dealerships and finds a nearly 100-day of supply of EVs. That is nearly twice the supply of other vehicles, suggesting, “consideration is well ahead of sales.”
Then there is the bottom line of price. The Alliance says the average EV costs $59,500. That is more than $10,000 more than the average cost of an internal combustion engine vehicle, which comes in at $48,200.
No one ever said this transition would be a smooth ride. The automakers are signaling that a bumpy road is ahead for EVs.
Luxury brands usually offer the newest in technology because they are more likely to build in a profit margin. As battery technology continues to advance, range and price should allow for models to find price points between $25-35K. This seems to be a place in the market Chinese manufacturers are filling. When you consider that the 2024 model year will offer over 130 different BEVs in the U.S. compared to two in 2010, it is quite a jump in a little over a decade (https://www.visualcapitalist.com/the-number-of-ev-models-will-double-by-2024/). It will be a challenge to reduce greenhouse gas emission 50% by 2030 and 100% by 2050, but the transition to battery electric vehicles gives us a chance.